EXHIBIT
10.1


 


OSIRIS
THERAPEUTICS, INC.

AMENDED AND RESTATED 2006 OMNIBUS PLAN

(as amended and restated effective June 4, 2008)


 


ARTICLE
I

PURPOSE; EFFECTIVE DATE; DEFINITIONS


 


        1.1     Purpose.
    This Osiris Therapeutics, Inc. 2006 Omnibus Plan (the
“Plan” ) is intended to secure
for Osiris Therapeutics,  Inc. (the “Company”
) and its stockholders the benefits of the incentive inherent in common stock
ownership by the employees of the Company and its subsidiaries and directors of
the Company who are largely responsible for the Company’s future growth and
continued financial success and to afford such persons the opportunity to
obtain or increase their proprietary interest in the Company on a favorable
basis and thereby have an opportunity to share in its success.


 


        1.2     Effective Date.
    This Plan (as initially adopted by the Board and
ratified by the stockholders) initially became effective on April 17,
2006. This Plan has been amended and restated in its entirety, effective June 4,
2008, to, among other things, be exempt from (or, where applicable, to comply
with) the requirements of Section 409A of the Code and to incorporate
certain other amendments and clarifications.


 


        1.3     Definitions.
    Throughout this Plan, the following terms shall have
the meanings indicated:


 


        (a)   
“Agreement” shall mean an Option
Agreement, Restricted Stock Agreement, Performance Share Agreement, Performance
Unit Agreement or SAR Agreement.


 


        (b)   
“Benefits” shall mean any one or more
of the following awards that may be granted under this Plan:


 


          (i)  Options
(including ISOs and NQSOs);


 


         (ii)  Stock
Appreciation Rights;


 


        (iii)  Performance
Shares;


 


        (iv)  Performance
Units; or


 


         (v)  Restricted
Stock.


 


        (c)   
“Board” shall mean the Board of
Directors of the Company.


 


        (d)   
“Change of Control” shall mean (a) the
reorganization, consolidation or merger of the Company or any of its
subsidiaries holding or controlling a majority of the assets relating to the
business of the Company, with or into any third party (other than a
subsidiary); (b) the assignment, sale, transfer, lease or other
disposition of all or substantially all of the assets of the Company and its
subsidiaries taken as a whole; or (c) the acquisition by any third party
or group of third parties acting in concert, of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission (“SEC”)
under the Securities Exchange Act of 1934, as amended) of shares of voting
stock of the Company, the result of which in the case of any transaction
described in clauses (a), (b) and (c) above is that immediately
after the transaction the stockholders of the Company immediately before the
transaction, other than the acquiror, own less than fifty percent (50%) of the
combined voting power of the outstanding voting securities entitled to vote
generally in the election of directors of the surviving or resulting
corporation in a transaction specified in clause (a) above, the
acquiror in a transaction specified in clause (b) above, or the
Company or the acquiror in a transaction specified in clause (c) above.  Notwithstanding the foregoing, the sale of
Company securities beneficially owned by Peter Friedli (“Friedli Shares”) shall
not, by itself or when combined with any other transactions, constitute a
Change in Control, unless such other transactions would constitute a Change in
Control without regard to the sale of Friedli Shares.


 


        (e)   
“Code” shall mean the Internal
Revenue Code of 1986, as amended, any successor revenue laws of the United
States, and the rules and regulations promulgated thereunder.


 


        (f)    
“Committee” shall mean any
committee of the Board designated by the Board to administer this Plan.


 


        (g)   
“Common Stock” shall mean the
common stock, par value $.001 per share, of the Company.


 


        (h)   
“Company” shall mean Osiris
Therapeutics, Inc., a Delaware corporation.


 


 

















 


        (i)    
“Eligible Person” shall mean an
Employee or a Non-Employee Director who has been designated by the Committee as
eligible to receive a Benefit under this Plan in accordance with Section 3.1.


 


        (j)    
“Employee” shall mean any person
engaged or proposed to be engaged as an officer or employee of the Company or
one of its subsidiaries.


 


        (k)   
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


        (l)    
“Fair Market Value” shall mean
with respect to the Common Stock on any day, (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as
reported on the principal securities exchange on which shares of Common Stock
are then listed or admitted to trading, or (ii) if not so reported, the
average of the closing bid and asked prices on the immediately preceding
business day as reported by NASDAQ, or (iii) if not so reported, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Committee. In the event that the price of a share of Common
Stock shall not be so reported or furnished, the Fair Market Value of a share
of Common Stock shall be determined by the Committee in good faith. For
purposes hereof, the fair market value on any day of an Option granted under
the Plan shall be the value of the underlying Stock, determined as aforesaid,
less the exercise price of the Option. A “business day” is any day, other than
Saturday or Sunday, on which the relevant market is open for trading.


 


        (m)  
“ISO” shall mean an Option that
qualifies as an incentive stock option under Code Section 422. No Option
that is intended to be an ISO shall be invalid under this Plan for failure to
qualify as an ISO.


 


        (n)   
“NQSO” shall mean a nonqualified
stock option which is an Option that does not qualify as an incentive stock
option under Code Section 422.


 


        (o)   
“Non-Employee Director” shall mean
a member of the Board who is not an Employee.


 


        (p)   
“Option” shall mean an option to
purchase shares of Common Stock granted by the Committee. An Option may be
either an ISO or a NQSO, but only an Employee may be granted an ISO.


 


        (q)   
“Option Agreement” shall mean the
certificate evidencing an Option grant.


 


        (r)   
“Option Shares” shall mean the shares
of Common Stock purchased upon exercise of an Option.


 


        (s)   
“Performance Cycle” shall have the
meaning set forth in Section 7.1.


 


        (t)    
“Performance Period” shall have
the meaning set forth in Section 6.1.


 


        (u)   
“Performance Share” shall mean an
award made pursuant to Article VI of this Plan of the right to receive
Common Stock at the end of a specified Performance Period if specified
performance goals are met.


 


        (v)   
“Performance Unit” shall mean an
award made pursuant to Article VII of this Plan of the right to receive a
fixed dollar amount, payable in cash or Common Stock or a combination of both,
at the end of a specified Performance Cycle if specified performance goals are
met.


 


        (w)  
“Plan” shall mean this Osiris
Therapeutics, Inc. 2006 Omnibus Plan, as the same may be amended from time
to time.


 


        (x)   
“Restricted Stock” shall mean
Common Stock granted under Article VIII of this Plan, subject to such
restrictions, if any, as the Committee may determine, as evidenced in a
Restricted Stock Agreement. Shares of Common Stock shall cease to be Restricted
Stock when, in accordance with the terms of the Restricted Stock Agreement,
they become transferable and free of substantial risk of forfeiture.


 


        (y)   
“Restricted Stock Agreement” shall
mean any agreement evidencing the grant of Restricted Stock to an Eligible
Person pursuant to this Plan.


 


        (z)   
“Restriction Period” shall mean
the time period, if any, during which Restricted Stock is subject to the
restrictions set forth in a Restricted Stock Agreement.


 


        (aa) 
“SAR Agreement” shall mean the
certificate evidencing the grant of a Stock Appreciation Right to an Eligible
Person pursuant to this Plan.


 


        (bb) 
“Stock Appreciation Right” or “SAR”
shall mean the right to receive cash or Common Stock, granted pursuant to Article V
of this Plan and a SAR Agreement.


 


2

















 


        (cc) 
“10% Stockholder” shall mean an
individual owning (directly or by attribution as provided in Code Section 424(d))
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company.


 


ARTICLE
II

ADMINISTRATION


 


        2.1     Committee Administration.
    This Plan and the Benefits awarded hereunder shall be
interpreted, construed and administered by the Committee in its sole
discretion. An Eligible Person (or other person, such as a beneficiary)
eligible for Benefits under the Plan may appeal to the Committee in writing any
decision or action of the Committee with respect to the Plan that adversely
affects the Eligible Person (or other person). Upon review of such appeal and
in any other case where the Committee has acted with respect to the Plan, the
interpretation and construction by the Committee of any provisions of this Plan
or of any Benefit shall be conclusive and binding on all parties.


 


        2.2     Committee Composition.
    The Committee shall consist of not less than two
persons who shall be members of the Board and shall be subject to such terms
and conditions as the Board may prescribe. Each Committee member shall be a “non
employee director” within the meaning of Rule 16b-3 promulgated under the
Exchange Act and shall qualify to make determinations as to executive
compensation under the listing requirements of the NASDAQ Global Market (or
whatever other exchange the Common Stock may be listed for trading from time to
time). Once designated, the Committee shall continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused and remove all members of the Committee.


 


        A
majority of the entire Committee shall constitute a quorum, and the action of a
majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the Committee. In addition, any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully as effective as if it had been made by a majority vote
at a meeting duly called and held. Subject to the provisions of this Plan and
the Company’s bylaws, and to any terms and conditions prescribed by the Board,
the Committee may make such additional rules and regulations for the
conduct of its business as it shall deem advisable. The Committee shall hold
meetings at such times and places as it may determine.


 


        2.3     Committee Powers.
    The Committee shall have authority to award Restricted
Stock and to grant Options, SARs, Performance Shares and Performance Units
pursuant to or as evidenced by an Agreement providing for such terms (not inconsistent
with the provisions of this Plan) as the Committee may consider appropriate.
Such terms shall include, without limitation, as applicable, the number of
shares, the exercise price, the medium and time of payment, the term of each
award and any vesting requirements, if any, and may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or SAR, the terms and conditions applicable to Performance
Shares and Performance Units or on the transferability or forfeitability of
Restricted Stock. Notwithstanding any such conditions, the Committee may, in
its discretion, accelerate the time at which any Option or SAR may be exercised
or the time at which Restricted Stock may become transferable or
nonforfeitable. In addition, the Committee shall have complete discretionary
authority to prescribe the form of Agreements; to adopt, amend and rescind rules and
regulations pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. All expenses of
administering this Plan shall be borne by the Company. The Committee shall have
the authority to delegate from time to time its powers hereunder, in whole or
in part, in accordance with and subject to compliance with all applicable laws,
rules and regulations.


 


        2.4     Receipt of Benefits by
Committee Members.     Members of the Committee
shall be eligible to receive Benefits under this Plan; provided, however, that
the Committee may, but shall not be required to, seek ratification of the Board
or members thereof, on such terms as the Committee shall determine, in respect
of any such Benefits so awarded.


 


        2.5     Good Faith Determinations.
    No member of the Committee or other member of the Board
shall be liable for any action or determination made in good faith with respect
to this Plan or any Benefit granted hereunder.


 


ARTICLE
III

ELIGIBILITY; TYPES OF BENEFITS; SHARES SUBJECT TO PLAN


 


        3.1     Eligibility.
    The Committee shall from time to time determine and
designate Employees and Non-Employee Directors as Eligible Persons who shall
receive Benefits under this Plan and the number of Options, Stock Appreciation
Rights, Performance Shares, Performance Units and shares of Restricted Stock to
be awarded to each such Eligible Person or the formula or other basis on which
such Benefits shall be awarded to Eligible Persons. In making any such award,
the Committee may take into account the nature of services rendered by an
Eligible Person, commissions, fees or other compensation earned by the Eligible
Person, the capacity of the Eligible Person to contribute to the success of the
Company and other factors that the Committee may consider relevant.


 


        3.2     Types of Benefits.
    Benefits under this Plan may be granted in any one or
any combination of (a) Options, (b) Stock Appreciation Rights, (c) Performance
Shares, (d) Performance Units, and (e) Restricted Stock, as described
in this Plan. The Committee may (x) award 


 


3

















 


Benefits in tandem so that acceptance of or exercise
of one Benefit cancels the right of an Eligible Person to another and (y) award
Benefits in any combination or combinations and subject to any condition or
conditions consistent with the terms of this Plan that the Committee in its
sole discretion may consider appropriate.


 


        3.3     Shares Subject to this Plan.
    Subject to the provisions of Section 4.1(e) (relating
to adjustment for changes in Common Stock), the maximum number of shares that
may be issued under this Plan shall not exceed in the aggregate 1,450,000
shares of Common Stock. The maximum number of shares authorized under this Plan
shall only be increased with approval of the stockholders of the Company
(except as provided in Section 4.1(e)). Such shares may be authorized and unissued
shares or authorized and issued shares that have been reacquired by the
Company. If any Benefits awarded under this Plan shall for any reason terminate
or expire, or be surrendered or forfeited, without having been exercised in
full, or without shares otherwise issuable thereunder having been issued for
any reason, then the shares not purchased or issued under such Benefits shall
be available again for grant hereunder, provided, however, that insofar as an
SAR is exercised and settled for cash, the number of shares in respect of which
the SAR is so exercised and settled shall not again be available for grant
hereunder. Anything in this Plan to the contrary notwithstanding, in no event
shall any Eligible Person receive in any calendar year Benefits under this Plan
involving more than 125,000 shares of Common Stock (subject to adjustment as
provided in Section 4.1(e)).


 


        3.4     $100,000 Limitation.
    Except as provided elsewhere in this Section, the
Committee shall not grant an ISO to, or modify the exercise provisions of an
outstanding ISO for, any person who, at the time of grant or modification, as
applicable, would thereby hold ISOs issued by the Company if the aggregate Fair
Market Value (determined as of the respective dates of grant and modification
of each Option) of the Option Shares underlying such ISOs as are exercisable
for the first time during any calendar year would exceed $100,000 (or such
other limitation as may be prescribed by the Code from time to time). The
foregoing restriction on modification of outstanding ISOs shall not preclude
the Committee from modifying an outstanding ISO if, as a result of such
modification and with the consent of the holder, such Option no longer
constitutes an ISO. Furthermore, if the $100,000 limitation (or such other
limitation prescribed by the Code) described in this Section is exceeded,
then the ISO, the granting or modification of which resulted in exceeding such
limitation, shall be treated as an ISO up to the limitation, and the excess
shall be treated as a NQSO.


 


ARTICLE
IV

STOCK OPTIONS


 


        4.1     Grant; Terms and Conditions.
    The Committee, in its discretion, may from time to time
grant ISOs or NQSOs, or both, to any Eligible Person; provided that ISOs shall
only be granted to Employees. Each Eligible Person who is granted an Option
shall receive an Option Agreement from the Company in a form specified by the
Committee and containing such provisions, consistent with this Plan, as the
Committee, in its sole discretion, shall determine at the time the Option is
granted.


 


        (a)   
Number of Shares.
    Each Option Agreement shall state the number of shares
of Common Stock to which it pertains.


 


        (b)   
Option Price.
    Each Option Agreement shall state the Option exercise
price, which shall not be less than 100% of the Fair Market Value per share of
Common Stock on the date of grant of the Option. In the case of an ISO granted
to a 10% Stockholder, the Option exercise price shall not be less than 110% of
the Fair Market Value per share of Common Stock on the date of grant of the
Option. The date of the grant of an Option shall be the date specified by the
Committee in its grant of the Option. Subject to the foregoing, the price at
which each share of Common Stock covered by an NQSO granted under the Plan may
be purchased shall be the price determined by the Committee, in its absolute
discretion, to be suitable to attain the purposes of this Plan.


 


        (c)   
Medium and Time of Payment.
    Upon the exercise of an Option, the Option exercise
price shall be payable in United States dollars, in cash (including by check)
or (unless the Committee otherwise prescribes) in shares of Common Stock owned
by the optionee (but not with Restricted Stock prior to the expiration of the
Restriction Period), in NQSOs granted to the optionee under the Plan which are
then exercisable (provided that the purchase price of Common Stock under an ISO
may not be paid in NQSOs), or in a combination of cash, Common Stock and NQSOs.
If all or any portion of the Option exercise price is paid in Common Stock
owned by the optionee, then that stock shall be valued at its Fair Market Value
as of the date the Option is exercised. If all or any portion of the Option
exercise price is paid in NQSOs granted to the optionee under the Plan, then
such NQSOs shall be valued at their Fair Market Value as of the date the Option
is exercised.


 


        (d)   
Term and Exercise of Options.
    The term of each Option shall be determined by the
Committee at the time the Option is granted; provided that the term of an
Option shall in no event be more than ten years from the date of grant or, in
the case of an ISO granted to a 10% Stockholder, more than five years from the
date of grant. During the lifetime of an optionee, the Option shall be
exercisable only by him or her and shall not be assignable or transferable by
him or her and no person shall acquire any rights therein. Following an
optionee’s death, the Option may be exercised (to the extent permitted under
the Plan) by the person designated by the optionee as a beneficiary in a
written notification delivered to the Committee prior to the optionee’s death,
or if there is no such written designation, by the executor or administrator of
the optionee’s estate or by the person or persons to whom such rights pass by
will or by the laws of descent and distribution.


 


        (e)   
Recapitalization; Reorganization.
    Subject to any otherwise required action by the
stockholders of the Company, the Change of Control provisions set forth in Article IX
of this Plan and any provision expressly to the contrary and contained in an
Agreement, each 


 


4

















 


of (i) the maximum number of shares of Common
Stock that may be issued under this Plan pursuant to Section 3.3 above, (ii) the
maximum number of shares of Common Stock that may be granted or be the subject
of grants made to any Participant in any calendar year, (iii) the number
of shares of Common Stock covered by each outstanding Option, (iv) the
number of shares of Common Stock to which each Stock Appreciation Right or
Performance Share relates, (v) the kind of shares subject to outstanding
Benefits and (vi) the per share exercise price under each outstanding
Option or SAR, shall be proportionately and equitably adjusted to account for
any increase or decrease in the number of issued shares of Common Stock
resulting from a reorganization, recapitalization, stock split, combination of
shares, merger, consolidation, rights offering, subdivision or consolidation of
shares or the payment of a stock dividend (but only on the Common Stock) or any
other change in the capital structure or state of incorporation of the Company,
in each case, in the manner the Committee deems appropriate. Such other
substitutions or adjustments shall be made as may be determined by the
Committee, in its sole discretion, to be necessary or appropriate under the
circumstances. In connection with any event described in this paragraph, the
Committee may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.


 


        Subject
to any action that may otherwise be required on the part of the stockholders of
the Company, if the Company is the surviving corporation in any merger,
consolidation, sale, transfer, acquisition, tender offer or exchange offer
which does not result in a Change of Control, then each outstanding Option,
Stock Appreciation Right, Restricted Stock and Performance Share award shall pertain
to and apply to the securities or other consideration that a holder of the
number of shares of Common Stock subject to the Option or to which the Stock
Appreciation Right or Restricted Stock or Performance Share relates would have
been entitled to receive in such transaction.


 


        Notwithstanding
the foregoing, in no event shall any Option or be exercisable after the date of
termination of the exercise period of such Option.


 


        In the
event of a change in the Common Stock as presently constituted, which change is
limited to a change of all of the authorized shares with par value into the
same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the Common Stock
within the meaning of this Plan.


 


        The
grant of an Option, Stock Appreciation Right or other Benefit pursuant to this
Plan shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate,
sell or otherwise transfer all or any part of its business or assets.


 


        The
provisions of this Section 4.1(e) shall be limited in respect of ISOs
to the extent necessary to comply with the applicable provisions of Code Section 424(a).


 


        (f)    
Rights as a Stockholder.
    Subject to Section 10.10 of this Plan regarding
uncertificated shares, an optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by his or her Option
until the date of the issuance of a stock certificate to him or her for those
shares upon payment of the exercise price. No adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided in Section 4.1(e).


 


        (g)   
Modification, Extension and Renewal of
Options.     Subject to the terms and conditions
and within the limitations of this Plan, the Committee may modify, extend or
renew outstanding Options granted under this Plan or accept the surrender of
outstanding Options (to the extent not theretofore exercised) and authorize the
granting of new Options in substitution therefor (to the extent not theretofore
exercised). No modification of an Option shall, without the consent of the
optionee, alter or impair any rights or obligations under any Option
theretofore granted under this Plan. Notwithstanding the foregoing,


 


          (i)  no
Option exercise period may be extended beyond the latest date at which the
Option otherwise would have expired; and


 


         (ii)  the
Committee shall not have authority to reprice to reduce the exercise price
Options without first obtaining shareholder approval for such repricing.


 


        (h)   
Exercisability and Term of Options.
    Unless earlier terminated, Options granted pursuant to
this Plan shall be exercisable at any time on or after the dates of
exercisability and before the expiration date. Notwithstanding the foregoing,
an Option shall terminate and may not be exercised if the Eligible Person to
whom it is granted ceases to be employed by, or provide services as a
Non-Employee Director to, the Company, except that: (1) unless the
Committee shall at any time determine that the Eligible Person’s employment or
service was terminated for conduct that in the judgment of the Committee
involves dishonesty or action by the Eligible Person that is detrimental to the
best interest of the Company, the Eligible Person may at any time within ninety
(90) days after termination of his or her employment or service exercise
his or her Option but only to the extent the Option was exercisable by him or
her on the date of termination of employment or service; (2) if such
Eligible Person’s employment or service terminates on account of total and
permanent disability, then the Eligible Person may at any time within one year
after termination of his or her employment or service exercise his or her
Option but only to the extent that the Option was exercisable on the date of
termination of employment or service; and (3) if such Eligible Person dies
while in the employ of the Company or while serving as a Non-Employee Director,
or within the ninety (90) day or twelve month period following termination
of his or her employment or service as described in clause (1) or (2) above,
then his or her 


 


5

















 


Option may be exercised at any  time within twelve months following his or
her death by the person specified in Section 4.1(d), but only to the
extent that such Option was exercisable by him or her on the date of
termination of employment or service. The last sentence shall apply to any
outstanding Options which are ISOs to the extent permitted by Code Section 422,
and such outstanding ISOs in excess thereof shall, immediately upon the
occurrence of the event described in such sentence, be treated for all purposes
of the Plan as NQSOs and shall be immediately exercisable as such as provided
in such sentence. The Committee may, in its discretion, provide in any Option
Agreement or determine at any time after the date of grant that the
exercisability of an Option will be accelerated, in whole or in part, in the
event of an Eligible Person’s retirement, death, disability or termination of
service on the Board. Any cessation of employment, for purposes of ISOs only,
shall include any leave of absence in excess of ninety (90) days unless
the Employee’s reemployment rights are guaranteed by law or by contract.
Notwithstanding anything to the contrary in this subsection, an Option may not
be exercised by anyone after the expiration of its term. Notwithstanding
anything to the contrary in this subsection, an Option shall not terminate if
the Employee to whom it is granted ceases to be employed by the Company but
continues to serve as a Non-Employee Director of the Company or its successor,
in which event the Option shall terminate if the Eligible Person ceases to be a
Non-Employee Director of the Company or its successor and the Eligible Person
may at any time within ninety (90) days (or other applicable period
described above) after ceasing to be a Non-Employee Director exercise his or
her Option, but only to the extent that the Option was exercisable by him or
her on the date on which he or she ceased to be a Non-Employee Director.


 


        4.2     Other Terms and Conditions.
    Through the Option Agreements authorized under this
Plan, the Committee may impose such other terms and conditions, not
inconsistent with the terms hereof, on the grant or exercise of Options, as it
deems advisable.


 


ARTICLE
V

STOCK APPRECIATION RIGHTS


 


        5.1     Grant of Stock Appreciation
Rights.     The Committee, in its discretion,
may from time to time grant Stock Appreciation Rights to Eligible Persons under
this Plan. Such Stock Appreciation Rights may, but need not, be granted in
conjunction with an Option grant.


 


        5.2     Exercise.
    Stock Appreciation Rights shall entitle the holder,
upon exercise thereof in whole or in part, to receive payment in the amount and
form determined pursuant to Section 5.3(b). The exercise of Stock
Appreciation Rights shall result in a termination of the Stock Appreciation
Rights with respect to the number of shares covered by the exercise and, if
granted in conjunction with an Option, shall also result in a termination of
the related Option with respect to the number of shares covered by the
exercise. The exercise period of a Stock Appreciation Right may be extended in
accordance with Section 4.1(g) (as applied to Stock Appreciation
Rights instead of Options as otherwise therein provided), provided that such
extension is not beyond the latest date at which the Stock Appreciation Right
would have otherwise expired.


 


        5.3     Terms and Conditions.
    Stock Appreciation Rights granted under this Plan to
Eligible Persons shall be evidenced by SAR Agreements, which shall be in such form
and contain such provisions, consistent with this Plan, as the Committee, in
its sole discretion, shall determine at the time the Stock Appreciation Right
is granted.


 


        (a)   Stock
Appreciation Rights shall not be exercisable during the first six months after
their date of grant. Such rights shall be exercisable during the holder’s
lifetime only by the holder. Following the death of the Participant, the SAR
may be exercised (to the extent permitted under the Plan) by the person
designated as a beneficiary in a written notification delivered to the
Committee prior to the death, or if there is no such written designation, by
the executor or administrator of the Participant’s estate or by the person or
persons to whom such rights pass by will or by the laws of descent and
distribution.


 


        (b)   Upon
exercise of Stock Appreciation Rights, the holder shall be entitled to receive
therefor payment, in the sole discretion of the Committee, in the form of
shares of Common Stock (rounded down to the next whole number so that no
fractional shares are issued), cash or any combination thereof. The amount of
such payment shall be equal in value to the difference between the Stock
Appreciation Right exercise price per share (which shall be at least equal to the
Fair Market per share of the Common Stock as of the date of grant of the SAR)
and the Fair Market Value per share of the Common Stock on the date the Stock
Appreciation Right is exercised, multiplied by the number of shares with
respect to which the Stock Appreciation Right shall have been exercised.


 


        (c)   Stock
Appreciation Rights shall terminate in accordance with the provisions of Section 4.1(h) (as
applied to Stock Appreciation Rights instead of Options as otherwise therein
provided) if the holder’s employment or service with the Company (or its
successor, if applicable) terminates.


 


        5.4     Effect on Related Stock
Option.     The number of shares of Common Stock
with respect to which Stock Appreciation Rights are exercised (rather than the
number of shares issued by the Company upon such exercise) shall be deemed for
the purpose of Section 3.3 to have been issued under an Option granted
pursuant to this Plan and shall not thereafter be available for the granting of
further Benefits under this Plan.


 


        5.5     No Rights as a Stockholder.
    Holders of Stock Appreciation Rights hereunder shall
have no rights as stockholders in respect thereof. No adjustments shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as provided in Section 4.1(e),
as applied to Stock Appreciation Rights.


 


6

















 


ARTICLE
VI

PERFORMANCE SHARES


 


        6.1     Award of Performance Shares.
    The Committee shall have the authority to grant
Performance Shares to any Eligible Person, subject to the maximum number of
shares of Common Stock that may be issued under this Plan pursuant to Section 3.3,
above. The Committee shall determine the Eligible Persons to whom, and the time
or times at which, Performance Shares shall be awarded, the number of
Performance Shares to be included in each award, the duration of the period
(the “Performance Period”) during which, and the conditions under which,
receipt of the shares of Common Stock will be deferred, and the other terms and
conditions of the award in addition to those set forth in Section 6.2. The
provisions of Performance Share awards need not be the same with respect to
each grantee, and such awards to individual grantees need not be the same in
subsequent years.


 


        6.2     Terms and Conditions.
    Performance Shares awarded pursuant to this Article VI
shall be subject to the following terms and conditions and such other terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem desirable:


 


        (a)   
Conditions.
    The Committee, in its sole discretion, shall specify
the Performance Period during which, and the conditions under which, the
receipt of shares of Common Stock covered by the Performance Share award will
be deferred. The receipt of shares of Common Stock pursuant to a Performance
Share award may be conditioned upon the attainment of one or more
pre-established performance goals, which if applicable, may be established in
accordance with the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder. To meet such requirements, objective
performance goals must be established by the Committee in writing not later
than 90 days after the commencement of the Performance Period, provided
that the outcome is substantially uncertain at the time the goal is
established. The performance goals may be based on the Company’s stock price,
return on assets, return on capital employed, return on shareholders’ equity,
earnings, earnings per share, total shareholder return, sales, costs, success
in meeting specified product development or other milestones, or otherwise,
whether related to the performance of Osiris, a particular business unit,
individual performance, or otherwise, as may be established by the Committee
from time to time. Except as provided in any applicable Agreement, when circumstances
occur that cause predetermined performance objectives to be an inappropriate
measure of performance, the Compensation Committee, in its discretion, may
adjust the performance goals.


 


        (b)   
Award Certificate.
    Each Performance Share award shall be evidenced by, and
subject to the terms of, a Performance Share certificate executed by the
Company. The Performance Share certificate shall specify the number of shares
of Common Stock subject to the award, the applicable Performance Period, the
applicable performance goals, and the other terms and conditions applicable to
such award.


 


        (c)   
Stock Certificates.
    If the Committee determines, after the expiration of
the Performance Period, that the performance goals specified in the Performance
Share certificate and all other material terms of the Performance Share award
have been satisfied, stock certificates representing the number of shares of
Common Stock covered by the Performance Share award shall be issued and
registered in the name of, and delivered to, the grantee.


 


        (d)   
Termination of Employment or Service.
    Unless otherwise determined by the Committee at the
time of grant, the Performance Shares will be forfeited upon a grantee’s
termination of employment or service during the Performance Period for any
reason (including death, disability or retirement).


 


        (e)   
Payouts.
    At the end of a Performance Period, the Committee shall
determine the extent to which the applicable performance goals have been satisfied.
In the event of a payout with respect to a Performance Share award, such payout
shall be made no later than two and one-half (2 (1) / 2 ) months following the end of the
Performance Period.


 


        (f)    
Effect of Recapitalization; Reorganization.
    In the event of a transaction described in Section 4.1(e),
each outstanding Performance Share award shall be adjusted as provided in Section 4.1(e).


 


        6.3     Individual Limit.
    The maximum number of shares of Common Stock that may
be subject to Performance Share awards granted to any individual Eligible
Person during any calendar year shall be 50,000 shares (subject to any increase
or decrease pursuant to the adjustment provisions of this Plan).


 


        6.4     Deferrals.
    The Committee, in its discretion, may provide an
opportunity for Eligible Persons to defer Performance Share awards beyond the
scheduled payment date described in Section 6.2(e). In such event, the
deferral election and deferred payout shall comply with the requirements of Section 409A
of the Code. Accordingly, (i) the deferral election shall be made no later
than twelve (12) months prior to the end of the Performance Period (or six
months prior to the end of the Performance Period if the Performance Shares
qualify as “performance-based compensation” within the meaning of Section 409A),
(ii) the deferred payout date shall be a specified date or other
permissible payment event under Section 409A that is at least five (5) years
after the date described in Section 6.2(e), and (iii) in the case of
an Eligible Person who is a “specified employee” within the meaning of Section 409A
of the Code and such deferred payment is made on account of his or her
separation from service with the Company, the payment is made at least six (6) months
following such separation from service.


 


7

















 


ARTICLE
VII

PERFORMANCE UNITS


 


        7.1     Award of Performance Units.
    The Committee shall have the authority to grant
Performance Units to any Eligible Person, subject to Section 3.3. The
Committee shall determine the Eligible Person to whom, and the time or times at
which, Performance Units shall be awarded, the number of Performance Units to
be included in each award, the duration of the period (the “Performance Cycle”)
during which, and the conditions under which, a grantee’s right to Performance
Units will be vested, and the other terms and conditions of the award in
addition to those set forth in Section 7.2. A Performance Unit shall have
a fixed dollar value. The provisions of Performance Unit awards need not be the
same with respect to each grantee, and such awards to individual grantees need
not be the same in subsequent years.


 


        7.2     Terms and Conditions.
    The Performance Units awarded pursuant to this Article VII
shall be subject to the following terms and conditions and such other terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem desirable:


 


        (a)   
Conditions.
    The Committee, in its sole discretion, shall specify
the Performance Cycle during which, and the conditions under which, the grantee’s
right to Performance Units will be vested. The vesting of Performance Units
shall be conditioned upon the attainment of one or more pre-established
performance goals, which if applicable may be objective and established in
accordance with the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder. To meet such requirements, objective
performance goals must be established by the Committee in writing not later
than 90 days after the commencement of the Performance Cycle, provided
that the outcome is substantially uncertain at the time the goal is
established. The performance goals may be based on the Company’s stock price,
return on assets, return on capital employed, return on shareholders’ equity,
earnings, earnings per share, total shareholder return, sales, costs, success
in meeting specified product development or other milestones, or otherwise,
whether related to the performance of Osiris, a particular business unit,
individual performance, or otherwise, as may be established by the Committee
from time to time. Except as provided in any applicable Agreement, when
circumstances occur that cause predetermined performance objectives to be an
inappropriate measure of performance, the Committee, in its discretion, may
adjust the performance goals.


 


        (b)   
Award Certificate.
    Each Performance Unit Award shall be evidenced by, and
subject to the terms of, a Performance Unit certificate executed by the
Company. The Performance Unit certificate shall specify the dollar value of the
award, the applicable Performance Cycle, the applicable performance goals, and
the other terms and conditions applicable to such award.


 


        (c)   
Termination of Employment.
    Unless otherwise determined by the Committee at the
time of grant, the Performance Units will be forfeited upon an Eligible Person’s
termination of employment or service during the Performance Cycle for any
reason (including death, disability or retirement).


 


        (d)   
Payouts.
    At the end of a Performance Period, the Committee shall
determine the extent to which the applicable performance goals have been
satisfied. In the event of a payout with respect to a Performance Unit award,
such payout shall be made no later than two and one-half (2 (1) / 2 ) months following the end of the
Performance Period. Payment may be made in cash, shares of Common Stock or a
combination of both, as determined by the Committee in its sole discretion.


 


        (e)   
Effect of Recapitalization; Reorganization.
    In the event of a transaction described in Section 4.1(e),
each outstanding Performance Unit award shall be adjusted as provided in Section 4.1(e).


 


        7.3     Individual Limit.
    The maximum dollar amount of Performance Unit awards
that may be granted to any individual during any calendar year shall be
$4,000,000.


 


        7.4     Deferrals.
    The Committee, in its discretion, may provide an opportunity
for Eligible Persons to defer Performance Unit awards beyond the scheduled
payment date described in Section 7.2(d). In such event, the deferral
election and deferred payout shall comply with the requirements of Section 409A
of the Code. Accordingly, (i) the deferral election shall be made no later
than twelve (12) months prior to the end of the Performance Period (or six
months prior to the end of the Performance Period if the Performance Units
qualify as “performance-based compensation” within the meaning of Section 409A),
(ii) the deferred payout date shall be a specified date or other
permissible payment event under Section 409A that is at least five (5) years
after the date described in Section 7.2(d), and (iii) in the case of
an Eligible Person who is a “specified employee” within the meaning of Section 409A
of the Code and such deferred payment is made on account of his or her
separation from service with the Company, the payment is made at least six (6) months
following such separation from service.


 


ARTICLE
VIII

RESTRICTED STOCK


 


        8.1     Restricted Stock.
    The Committee, in its discretion, may from time to time
award and direct the Company to issue and transfer Restricted Stock to any
Eligible Person eligible to receive Benefits under this Plan. Each Eligible
Person who is awarded Restricted Stock subject to continuing restrictions shall
receive a Restricted Stock Agreement from the Company in a form specified by
the Committee and containing the terms and conditions, consistent with this
Plan, as the Committee, in its sole discretion, shall determine at the time the
award is made.


 


8

















 


        Restricted
Stock awarded to Eligible Persons may not be sold, transferred, pledged or
otherwise encumbered during the Restriction Period. The Eligible Person shall
otherwise have the entire beneficial ownership of the Restricted Stock awarded
to him or her, including the right to receive dividends and the right to vote
such Restricted Stock.


 


        If an
Eligible Person ceases to be employed by, or serve as a Non-Employee Director
of, the Company prior to the expiration of the Restriction Period, or if the
specified conditions are not met, then he or she shall forfeit all of his or
her Restricted Stock with respect to which the Restriction Period has not yet
expired and those shares of Common Stock must be immediately returned to the
Company; provided, however, that the Restricted Stock Agreements, in the
discretion of the Committee and pursuant to such terms and conditions as it may
impose, may provide: (1) that, if such Eligible Person’s employment or
service terminates for any reason other than conduct that in the judgment of
the Committee involves dishonesty or action by the Eligible Person that is
detrimental to the best interests of the Company, then the Restricted Stock or
any related compensation deferral or a portion thereof shall not be forfeited; (2) that,
if such Eligible Person’s employment or service terminates on account of total
and permanent disability, then the Eligible Person shall not forfeit his or her
Restricted Stock or any related compensation deferral or a portion thereof; and
(3) that, if such Eligible Person dies while employed by, or serving as a
Non-Employee Director of, the Company, then his or her Restricted Stock or any
related compensation deferral or a portion thereof is not forfeited. In
addition, the Committee shall, in accordance with its authority under Section 2.3
hereof, have the power to make any determinations as to the lapse of
restrictions in respect of any Restricted Stock upon the occurrence of any
event described above.


 


        Subject
to Section 10.10, each Eligible Person who is awarded Restricted Stock
may, but need not, be issued a stock certificate in respect of such shares of
Restricted Stock. Each certificate registered in the name of an Eligible
Person, if any, shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award as specifically set forth
in the Restricted Stock Agreement.


 


        The
Committee shall require that any stock certificate issued in the name of an
Eligible Person representing shares of Restricted Stock be held in the custody
of the Company until the expiration of the Restriction Period applicable to
such Restricted Stock and that, as a condition of such issuance of a
certificate for Restricted Stock, the Eligible Person shall have delivered a
stock power, endorsed in blank, relating to the shares covered by such
certificate. In no event shall the Restriction Period end prior to the payment,
or the making by the Eligible Person to the Company of adequate provision for
the payment, of the amount of any federal, state or local income or employment
tax withholding that may be required with respect to the Restricted Stock.


 


        During
the Restriction Period, the individual who owns Restricted Stock shall have the
right to vote shares of Restricted Stock and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.


 


        If any
change is made in the Common Stock by reason of any merger, consolidation,
reorganization, recapitalization, stock dividend, split up, combination of
shares, exchange of shares, change in corporate structure, or otherwise, then
any shares received by an Eligible Person with respect to Restricted Stock
shall be subject to the same restrictions applicable to such Restricted Stock
and the certificates representing such shares shall be deposited with the
Company.


 


ARTICLE
IX

CHANGE OF CONTROL


 


        9.1   Upon
a Change of Control where the Company is not the surviving corporation (or
survives only as a subsidiary of another corporation), unless the Committee
determines otherwise, all outstanding Benefits shall be assumed by, or replaced
with comparable rights granted by, the surviving corporation.


 


        9.2   Notwithstanding
the foregoing, subject to Section 9.3, in the event of a Change of
Control, the Committee may take any of the following actions: (a) require
that holders surrender their outstanding Options and Stock Appreciation Rights
in exchange for a payment by the Company, in cash or Common Stock as determined
by the Committee, in an amount equal to the amount by which the then Fair
Market Value of the shares subject to the holder’s unexercised Options and
Stock Appreciation Rights exceeds the exercise price of the Options and Stock
Appreciation Rights; (b) after giving holders an opportunity to exercise
their outstanding Options and Stock Appreciation Rights, terminate any or all
unexercised Options and Stock Appreciation Rights, at such time as the
Committee deems appropriate; or (c) declare all (or a portion of all)
outstanding Options and Stock Appreciation Rights to be fully exercisable and
declare that all (or certain) restrictions and conditions on outstanding
Performance Shares, Performance Unit, and Restricted Stock shall immediately
lapse. Any surrender or termination of rights under this Section 9.2 shall
take place as of the date of the Change of Control or such other date as the
Committee may specify.


 


        9.3   Notwithstanding
anything in the Plan to the contrary, in the event of a Change of Control, the
Committee shall not have the right to take any actions described in the Plan
(including without limitation actions described in Section 9.2) that would
make the Change of Control ineligible for favorable accounting treatment or
that would make the Change of Control ineligible for desired tax treatment if,
in the absence of such right, the Change of Control would qualify for such
treatment and the Company intends to use such treatment with respect to the
Change of Control.


 


ARTICLE
X

MISCELLANEOUS


 


 


9

















 


        10.1     Withholding Taxes.
    An Eligible Person granted Options, Restricted Stock,
Stock Appreciation Rights, Performance Shares or Performance Units under this
Plan shall be conclusively deemed to have authorized the Company to withhold
from the salary, commissions, fees or other compensation of such Eligible
Person funds in amounts or property (including Common Stock) in value equal to
any federal, state and local income, employment or other withholding taxes
applicable to the income recognized by such Eligible Person and attributable to
the Options, Option Shares, Restricted Stock, Stock Appreciation Rights,
Performance Shares or Performance Units as, when and to the extent, if any,
required by law; provided, however, that, in lieu of the withholding of federal,
state and local taxes as herein provided, the Company may require that the
Eligible Person (or other person exercising such Option, Stock Appreciation
Rights, Performance Shares or Performance Units or holding such Restricted
Stock) pay the Company an amount equal to the federal, state and local
withholding taxes on such income at the time such withholding is required or
such other time as shall be satisfactory to the Company.


 


        10.2     Amendment, Suspension,
Discontinuance or Termination of Plan.     The
Committee may from time to time amend, suspend or discontinue this Plan or
revise it in any respect whatsoever for the purpose of maintaining or improving
the effectiveness of this Plan as an incentive device, for the purpose of conforming
this Plan to applicable governmental regulations or to any change in applicable
law or regulations or for any other purpose permitted by law; provided,
however, that no such action by the Committee shall adversely affect any
Benefit theretofore granted under this Plan without the consent of the holder
so affected; and provided further that the Committee may not materially
increase the number of shares of Common Stock authorized under Section 3.3
of this Plan or materially modify this Plan’s requirements as to eligibility
for participation or materially increase the benefits accruing to participants
under this Plan, in any such case without the approval of the stockholders of
the Company. Unless sooner terminated by the Committee, this Plan will
terminate on April 16, 2016.


 


        10.3     Governing Law.
    This Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without giving effect to
principles of conflict of laws).


 


        10.4     Designation.
    This Plan may be referred to in other documents and
instruments as the “Osiris Therapeutics, Inc. Amended and Restated 2006
Omnibus Plan.”


 


        10.5     Indemnification of Committee.
    In addition to such other rights of indemnification as
they may have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys’ fees, actually and necessarily incurred in connection with
the defense of any investigation, action, suit or proceeding, or in connection
with any appeal therefrom, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with this
Plan or any Benefit, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in or dismissal or
other discontinuance of any such investigation, action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
investigation, action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his or her duties; provided
that, within 60 days after institution of any such investigation, action,
suit or proceeding, a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.


 


        10.6     Reservation of Shares.
    The Company shall at all times during the term of this
Plan, and so long as any Benefit shall be outstanding, reserve and keep
available (and will seek or obtain from any regulatory body having jurisdiction
any requisite authority in order to issue) such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of this Plan.
Inability of the Company to obtain from any regulatory body of appropriate
jurisdiction authority considered by the Company to be necessary or desirable
to the lawful issuance of any shares of its Common Stock hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such Common Stock as to which such requisite authority shall not have been
obtained.


 


        10.7     Application of Funds.
    The proceeds received by the Company from the sale of
Common Stock pursuant to the exercise of Options will be used for general
corporate purposes.


 


        10.8     No Obligation to Exercise.
    The granting of a Benefit shall impose no obligation
upon the holder to exercise or otherwise realize the value of that Benefit.


 


        10.9     Approval of Stockholders.
    No Benefit granted under this Plan shall be enforceable
against the Company unless and until this Plan, insofar as it relates to such
Benefit, has been approved or ratified by the stockholders of the Company in
the manner and to the extent required by the Exchange Act and the General
Corporation Law of the State of Delaware.


 


        10.10     Uncertificated Shares.
    Each Eligible Person who exercises an Option to acquire
Common Stock or is awarded Restricted Stock may, but need not, be issued a
stock certificate in respect of the Common Stock so acquired. A “book entry” ( i.e. , a computerized or manual entry)
shall be made in the records of the Company to evidence the issuance of shares
of Common Stock to an Eligible Person where no certificate is issued in the
name of the Eligible Person. Such Company records, absent manifest error, shall
be binding on Eligible Persons. In all instances where the date of issuance of
shares may be deemed significant but no certificate is issued in accordance
with this Section 10.10, the date of the book entry shall be the relevant
date for such purposes.


 


10

















 


        10.11     Forfeiture for Competition.
    If a participant in this Plan provides services to a
competitor of the Company or any of its subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent or otherwise, such
services being of a nature that can reasonably be expected to involve the
skills and experience used or developed by the participant while an Eligible
Person, then that participant’s rights to any Benefits hereunder shall
automatically be forfeited, subject to a determination to the contrary by the
Committee.


 


        10.12     Successors.
    This Plan shall be binding upon any and all successors
of the Company.


 


        10.13     Employment/Service Rights.
    Nothing in this Plan or in any Agreement shall confer on
any Employee any right to continue in the employ of the Company or any of its
subsidiaries or shall interfere in any way with the right of the Company or any
of its subsidiaries to terminate such person’s employment at any time. Nothing
in this Plan or in any Agreement shall confer on any Non-Employee Director any
right to continue to serve as a member of the Board, nor is there any implied
agreement or understanding that such Non-Employee Director will be nominated
for reelection to the Board.


 


        10.14     Other Actions.
    Nothing contained in the Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including, but not by way of limitation, the right of the Company to grant
options for proper corporate purposes other than under the Plan with respect to
any employee or other person, firm, corporation or association.


 


        10.15     Tax Treatment and
Characterization.     Neither the Company nor
any other person represents or warrants to any Plan participant (i) that
any Option granted hereunder shall be considered an ISO for applicable tax
purposes or (ii) that favorable or desirable tax treatment or
characterization will be applicable in respect of any Benefit.


 


        10.16     Legend.
    The Committee may require each person exercising an
Option to represent to and agree with the Company in writing that he or she is
acquiring the Option Shares without a view to distribution thereof. In addition
to any legend required by this Plan, the stock certificates representing such
Option Shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.


 


        All
certificates for Option Shares shall be subject to such stock transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, any applicable
federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.


 


11